McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

April 26, 2007 17:51 ET

McGraw-Hill Ryerson Reports First Quarter Results

WHITBY, ONTARIO--(CCNMatthews - April 26, 2007) - McGraw-Hill Ryerson Limited (TSX:MHR) -

Attention: Business/Financial Editors



Three Months to March 31, 2007 ($000) This Year Year Ago
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Sales, net $ 9,264 $ 12,276
Other 701 415
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Total revenue $ 9,965 $ 12,691

Net Loss (2,703) (1,239)
Net Loss per share $ (1.35) $ (0.62)

Note: Financial information commences on page 3 of this press release.


Summary

The first quarter of each fiscal year generally represents a small proportion (between 9% and 13%) of McGraw-Hill Ryerson's total annual revenue. McGraw-Hill Ryerson typically reports a loss for the first quarter because of the seasonal nature of our sales results and the first quarter of 2007 is no exception.

Revenue

Total revenue for the first quarter decreased by 21.5% to $10.0 million in 2007 compared to $12.7 million in 2006.

The Higher Education Division had consistent sales of $4.1 million in the first quarter of 2007 compared to $4.0 million in the corresponding period of 2006.

The School Division sales were $2.8 million compared to $5.9 million in 2006, a 52.1% decrease. These results are attributed to one-time additional funding by the Ontario and British Columbia governments to purchase textbooks in early 2006 that was not replicated in 2007. This decline is consistent with overall industry results, which showed a 50% decrease in the first quarter.

In the Professional division, sales increased by 12.2% in 2007 to $2.2 million, up from $2.0 million in the prior year. This positive trend is driven by strong results across several language and general reference titles.

Expenses

Operating expenses have decreased 17.0% to $4.4 million during the quarter ended March 31, 2007 compared to the same period in 2006. These expenses consist of cost of product and royalty expenses, which decreased as a function of the sales decrease.

Editorial, selling, general and administrative expenses have increased to $8.6 million from $8.4 million. This 2.9% increase is the result of increased information technology and support charges.

Net Income/Loss

Net Loss for the first quarter is $2.7 million compared to a Net Loss of $1.2 million in the first quarter of 2006. This variance is attributed mainly to the lower sales results in the School Division.

The accompanying financial statements should be read in conjunction with the "Notes to Financial Statements" included in McGraw-Hill Ryerson's Annual Report.



Notice to Reader
----------------
The attached financial statements have been prepared by
management of McGraw-Hill Ryerson Limited. The financial statements
for the three month period ended March 31, 2007 have not been
reviewed by the auditors of McGraw-Hill Ryerson Limited.


In business since 1944, McGraw-Hill Ryerson Limited is a leading Canadian publisher of educational resources, and information products and services for lifelong learning and enjoyment. Revenue in 2006 was $93 million. Additional information is available at http://www.mcgrawhill.ca.




McGRAW-HILL RYERSON LIMITED

BALANCE SHEETS
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(unaudited)

(In Thousands of Dollars)
March 31, December 31, March 31,
As of 2007 2006 2006
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ASSETS
Current
Cash $ 24,237 $ 33,511 $ 21,163
Accounts receivable 4,219 17,948 6,233
Due from affiliated companies 6,225 1,792 5,978
Inventories 11,335 8,066 12,534
Prepaid expenses and other assets 1,230 355 1,112
Income taxes receivable 3,390 - 3,370
Future tax assets 1,481 2,485 1,438

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Total current assets 52,117 64,157 51,828

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Capital assets, net 18,111 18,359 18,447
Other assets, net 13,258 12,695 11,546

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Total assets $ 83,486 $ 95,211 $ 81,821

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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current
Accounts payable and accrued
charges 6,423 10,697 7,727
Income taxes payable - 511 -
Due to parent and affiliated
companies 3,314 7,291 3,942

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Total current liabilities 9,737 18,499 11,669

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Future tax liabilities 373 214 641

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Total liabilities 10,110 18,713 12,310

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Shareholders' equity
Share capital
Authorized - 5,000,000 common
shares
Issued and outstanding -
1,996,638 common shares 1,997 1,997 1,997
Retained earnings 71,379 74,501 67,514

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Total shareholders' equity 73,376 76,498 69,511

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Total liabilities and
shareholders' equity $ 83,486 $ 95,211 $ 81,821

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McGRAW-HILL RYERSON LIMITED

STATEMENTS OF INCOME
--------------------
(unaudited)

(In Thousands of Dollars except per share data)
For the three months ended March 31, 2007 March 31, 2006
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REVENUE
Sales, less returns $ 9,264 $ 12,276
Other 701 415
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Total revenue 9,965 12,691

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EXPENSES
Operating 4,362 5,258
Editorial, selling, general and administrative 8,608 8,369
Amortization - prepublication costs 686 708
Amortization - capital assets 341 334
Foreign exchange loss (gain) 69 (5)

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Total operating expenses 14,066 14,664

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Loss before income taxes (4,101) (1,973)

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Provision for (recovery of) income taxes
Current (2,561) (1,910)
Future 1,163 1,176

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(1,398) (734)

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Net loss for the period $ (2,703) $ (1,239)


Retained earnings, beginning of period 74,501 69,142
Dividends paid to shareholders ($0.21 per
share; 2006 - $0.195 per share) (419) (389)

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Retained earnings, end of period $ 71,379 $ 67,514

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Loss per share
Basic $ (1.35) $ (0.62)

Diluted $ (1.35) $ (0.62)

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Weighted average number of shares for basic and diluted earnings per share
for 2007 and 2006 is 1,996,638.



McGRAW-HILL RYERSON LIMITED

STATEMENTS OF CASH FLOWS
------------------------
(unaudited)

(In Thousands of Dollars)
For the three months ended March 31, 2007 March 31, 2006
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OPERATING ACTIVITIES
Net loss for the period $ (2,703) $ (1,239)
Add/deduct charges to income not
affecting cash:
Amortization - prepublication costs 686 708
Amortization - capital assets 341 334
Future income taxes 1,163 1,340
Net change in non-cash working capital
balances related to operations (7,000) (4,961)

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Cash used in operating activities $ (7,513) $ (3,818)

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INVESTING ACTIVITIES
Prepublication costs (1,249) (1,771)
Capital assets (93) (65)

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Cash used in investing activities (1,342) (1,836)

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FINANCING ACTIVITIES
Dividends paid to shareholders (419) (389)

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Cash used in financing activities (419) (389)

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Net decrease in cash during period (9,274) (6,043)
Cash, beginning of period 33,511 27,206

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Cash, end of period $ 24,237 $ 21,163

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Supplemental cash flow information
Interest paid $ - $ -
Income taxes paid $ 1,340 $ 1,105

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Contact Information

  • McGraw-Hill Ryerson Limited
    Gordon Dyer
    Executive Vice President and Chief Financial Officer
    (905) 430-5032
    Website: www.mcgrawhill.ca